RETAIL DIVISION

Grupo Sanborns

Consistent with our expectations, we increased our presence in the market in 2012, attaining sales of $39,411 million pesos, an increase of 8.2%, or $2,995 million pesos, over the 2011 figures.

This was attributable to: i) sales of merchandise, food, and beverages, primarily at Sears, and, to a lesser extent, at the Sanborns and the iShop stores, as well as ii) consumer credit revenues from the Sears, Sanborns and MixUp credit cards.

In cumulative terms, Sears increased its total sales by 8.7% and its same-store sales (SSS) by 5.7%. Sanborns sales increased 5.7% overall and 4.2% on an SSS basis. The iShop/MixUp stores increased their total sales by 16.8%, and their SSS sales moved up 10.0%. Other formats such as Dax, Saks, and the Sanborns Café restaurants, increased their total sales by 3.4%.

Operating income came to $4,566 million pesos, accompanied by a margin of 11.6%, a slight, 0.2 percentage point decline that resulted from higher merchandise costs as well as a reduction in operating expenses, both with respect to sales. EBITDA came to $5,226 million pesos, an increase of 6.6% in 2012 on a 13.3% margin.

Grupo Sanborns’ consolidated net income totaled $3,298 million pesos, compared to the 2011 figure of $2,951 million pesos, an 11.7% increase.

In 2012 we opened 1 Sears store, 4 Sanborns store-restaurants and 4 iShop stores. We closed 2 Sears stores, 1 Jeanious boutique, 1 Sanborns store, and 2 Sanborns Café, and we converted 2 Sanborns to Sanborns Café restaurants. We also closed 3 MixUp music stores and 1 eduMac center.

Grupo Sanborns ended the year with 418 units under operation, a sales floor area of 973,876 m² and seating capacity of 60,331 persons under formats such as Sears, Sanborns, and iShop/MixUp, as well as others including the Dax stores, Sanborns Café restaurants, Saks Fifth Avenue, Sears, and Sanborns in Central America, as well as a few specialized boutiques and two shopping centers.

We increased our presence in the market in 2012 and implemented initiatives aimed at rewarding customer loyalty, which increased traffic volumes at the stores. We introduced exclusive merchandise and diversified the food options on the restaurant menus, while maintaining the quality of service.

Grupo Sanborns’ capital investments increased to $961 million pesos, which included investments in new stores and renovations. The make-over of the Sanborns stores included the elimination the glass showcases, allowing merchandise to be displayed in a more attractive fashion. Sears focused more on fashion and accessories for the entire family and continued to offer appliances the additional technical service. This new concept involved replacing the existing lighting with LED options and, in the case of Sanborns, the introduction of energy co-generation plants, steps that create significant savings and are consistent with the company-wide philosophy of sustainable and environmental practices.